Hold a Family Financial Meeting
Do you have a family CFO? The family CFO is the family member who is responsible for the family finances - paying the bills, tracking the budget, and managing savings. While most families have one person who is in charge of the family budget, it’s essential that all family members understand the financial situation of the family, as well as the short-term and long-term goals.
When changes occur with the family’s financial situation, including layoffs, increased bills, or unexpected medical situations, it’s a good idea to have a family meeting to talk about the financial implications.
Gather all of the family members together, including any children who are old enough to understand. While some parents may not want to involve their kids in any negative financial discussions, it’s a great way to teach your children financial responsibility, and also gain their understanding and cooperation with any changes you will be making. Not only will your children be more inclined to assist with your changes, it will also help set them up for financial literacy in the future.
Before the meeting, the family CFO should do some analysis to determine what the current situation is for the family. If an event has occurred that will require major changes in spending, having some information about what should change would be a helpful starting point for discussion.
The family financial meeting should occur with little to no distraction. Keep the television off, and refrain from answering the phone, texting, or looking at your Blackberry. During the meeting, the family CFO should lead the discussion, explaining what changes are occurring, and how that will impact everyone. Depending on the ages of your children, brainstorming some solutions is a great way to involve the entire family. Discuss all alternatives that are available, and agree on the changes as a family.
Going forward, having some follow-up discussions is helpful. The family CFO can explain how well the family is following the financial plan, and the family can continue to refine the financial plan.